Mike Hedrick never thought he would own solar panels — not because of a lack of interest, but rather the high cost associated with installing the panels on his Pocahontas County home. But when his daughter didn’t use her entire college fund, he saw the opportunity to invest.
“I just kind of went ahead and done it and just thought that it would help me with my electricity bill because I was planning on retiring,” said Hedrick, 63, who has since then retired from his job at the Green Bank Observatory.
“So, I just figured I’ll try to do a little bit for the planet — not that I got that type of money to do that — but also help myself,” he added.
That was back in 2020. And with the exception of the first two months of winter after his home was fitted with 26 solar panels, Hedrick hasn’t had an electric bill since. Although he does pay a $5 flat meter fee to the electric company every month, he says the investment has “paid for itself.”
But two major utility companies are now asking West Virginia regulators to change the way solar is reimbursed throughout more than half the state — covering most of the northern parts, stretching from the Mid-Ohio Valley to the Eastern Panhandle and including where Hedrick lives. While he’ll be grandfathered into his existing rates, advocates warn the change will make solar less affordable for West Virginians and threaten the state’s budding solar industry.
The proposal, if passed, would only affect customers serviced by Mon Power and Potomac Edison. But it would set a precedent other utility companies, including Appalachian Power, which serves most of the rest of the state, could follow.
“The money side of it is going to totally take the majority of West Virginia out of it,” Hedrick said.
Utility companies propose slashing solar incentive
In a rate case filed with the West Virginia Public Service Commission, Mon Power and Potomac Edison are asking the commission to restructure the current net metering policy for future solar customers and change how much users are credited for selling back power generated through solar.
Currently, the policy allows households and businesses to sell back their surplus solar energy to the electric grid at a fair market value — the same price the power companies charge other residential customers for that electricity. However, Mon Power and Potomac Edison want to change the policy so that solar customers are credited at a “wholesale rate” of $0.0663 per kilowatt hour — roughly half of the rate charged by the companies — rather than the market rate.
The companies say this change is necessary for fairness. They said it will ensure that solar customers “actually pay for the distribution, transmission, and capacity facilities that they use” and are not subsidized by non-solar customers.
In an email to Mountain State Spotlight, a spokesperson for parent company FirstEnergy said the companies are not discouraging net metering, but rather “working to ensure a fair balance for everyone.”
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But cost-benefit analyses have found that the current method of net metering imposes no significant increase for non-solar ratepayers and that the economic benefits outweigh the costs, resulting in a net benefit for all customers, according to the Brookings Institute.
“The premise that solar producers are subsidizing other customers is simply unfounded,” said Heather Ransom, director of marketing and storytelling at West Virginia solar installation company Solar Holler. She added that solar customers already pay their utility company a base level fee which is supposed to cover the connection and other related costs.
Ransom also noted that the utility companies’ reasoning ignores the added benefits solar provides them, including a more resilient electric grid.
A review of 11 net metering studies by Environment America Research and Policy Center found that in addition to increased grid resiliency, solar energy offers added benefits through avoided energy costs, reduced capital investment and reduced financial risks and electricity prices.
A threat to West Virginia’s budding solar industry
The state regulators aren’t set to consider the utilities’ request until January of next year, and they’re still accepting public comment on the proposal. But if they do change the net metering laws, it could potentially deter further investment by West Virginians because it would affect the return on investment and projected savings for future solar owners, said Leah Barbor, West Virginia program director for Solar United Neighbors.
While there are several different factors to consider, including the scale of the project, Barbor said the current average return on investment for a residential homeowner in West Virginia is between 10 to 12 years. Under the proposed change to net metering, it could take homeowners twice as long to recoup their costs. The estimated operational lifespan of a solar panel is roughly 30 years, according to the federal Department of Energy.
Barbor also warned that the proposal, if approved, will undercut the Mountain State’s budding solar industry.
Right now, roughly 3,000 homes and businesses participate in net metering, according to Barbor. And although the total number of solar jobs accounted for less than 1% of West Virginia energy jobs in 2022, the state has seen a 21.5% growth in solar jobs over the last five years, according to the Interstate Renewable Energy Council.
“Our solar market here in West Virginia its still in its infancy. But that’s not to say that it hasn’t been exponentially growing over recent years and so we still have a lot of opportunity here in the state to bring the benefits of solar to local communities,” Barbor said. “But net metering is really the backbone of equitable solar policy.”
Cuts to net metering policies in other states have resulted in the stifling of solar energy growth. Three of Nevada’s top largest providers of rooftop panels left the state entirely after the Nevada Public Utilities Commission curtailed the state’s net metering payments in 2015, and new residential solar installation permits in Nevada dropped 92% shortly after the change.
As the seasons change and the days begin to get shorter, Hedrick is using the credits from the excess energy he generated earlier this year to pay his monthly electric bill.
“During the summer you build up credits,” Hedrick said. “The summer carries you through the winter.”
His monthly energy report for October showed that Hedrick’s panels generated 886 kilowatt hours, 16% less than they did in September, and just a little less than the 893.2 kilowatt hours he consumed.
“If they cut the rate in half, [there’s] no way you can look at solar as an investment,” he said.
And while the proposal won’t affect Hedrick, he worries about the ability for West Virginians like himself to invest in solar in the future because net metering is what makes solar financially viable for regular people in states like West Virginia.
“This would totally take your average person out of the market for solar,” Hedrick said.